The Daily Alpha: April 1, 2016

The Daily Alpha: April 1, 2016

Garrett Baldwin

Here’s what’s happening in the hedge fund and alternative investment space today… 

“Today, SunEdison is in even worse shape than the beleaguered Valeant.”

While hedge fund readers continue to monitor the story of Bill Ackman and Canadian drug giant Valeant Pharmaceuticals, there’s another stock that is now in worse shape and dragging down funds in epic fashion.

SunEdison is punishing David Einhorn and other managers.

The stock was the big idea of Einhorn at the 2014 Robin Hood Investment Conference.

Now, as Fortune explains, it’s a portfolio killer.

“There's going to be overwhelming support for the Starboard slate if there is not material value creation ahead of the annual meeting."

That’s Jeff Lignelli, chief executive of Incline Global Management, weighing in on the ongoing battle between activist hedge fund Starboard Value and tech giant Yahoo.

Some investors have lost faith in Yahoo’s board.

Others are confident about the future of Alibaba.

But the but all see that something has to be done, and they’re taking Starboard’s side in what is gearing up to be one of the biggest proxy battles of 2016.

Here’s the full story.

“A three-month operation involving police forces in 57 countries led to the seizure of more than 10,000 tonnes and a million litres of fake and illicit products.”

This might not be an alternative investment story, but if you’re in the agricultural sector, this is pretty terrifying. It’s a report from European police agency Europol said.

And no, that is not an April Fools joke.

“Today’s rising food prices and the global nature of the food chain offer the opportunity for criminals to sell counterfeit and substandard food in a multi-billion criminal industry which can pose serious potential health risks to unsuspecting customers. The complexity and scale of this fraud means cooperation needs to happen across borders with a multi-agency approach,” said Chris Vansteenkiste, Cluster Manager of the Intellectual Property Crime Team at Europol.

Some may remember that 60 Minutes ran a lengthy report on the rise of fake olive oil here in the United States and abroad. If not, be sure to read about it, right here.

“Many countries have bankruptcy laws. But there is no equivalent framework for sovereign bankruptcies, not even something remotely close to that. The United Nations has taken the lead to fill this vacuum, and as Argentina’s case proves, the initiative is more important than ever.”

The New York Times breaks down the long debt battle between fund managers and Argentina

The country is returning to the global markets by issuing a $12 billion bond issue and heading in a new direction under Mauricio Macri.

But the op-ed page of the Gray Lady has something to say first to Paul Singer, NML Capital, Aurelius Capital and Dart Management.

Here it is.  

“The proposal would work with a broader campaign to encourage companies to build and expand their U.S. manufacturing operations."

Finally… Here we go again... 

Candidate Hillary Clinton proposes that the government invest $10 billion in partnerships to boost U.S. manufacturing bases and create partnerships that reward companies that do not outsource jobs to other nations.

“Mrs. Clinton plans to pay for the lift to the manufacturing sector with her recently released “claw back” proposal, which would strip corporations of tax benefits if they move jobs overseas,” according to the New York Times.

So, more government involvement in the private sector…

There’s the solution to crony capitalism that everyone’s looking for, right?

Based on the way that government simply dolls out money to big companies, it never ends up in the hands of the people that politicians mean to help. The bailout didn’t unleash bank lending…

The massive alternative investment program of 2009 didn’t lead to lower energy costs for consumers…

This one has to work…

It is hard to imagine that they won’t just take the money and spend it on robot development...

Clinton’s idea is a 20th century solution to a 21st century issue, but don’t expect politicians to come up with anything else.

Here’s a great piece in the National Review that explains the political classes desire to bring back the manufacturing base of the 1950s, but how they miss the key issue to the argument:

American productivity is higher than ever.

 That is unless Clinton is planning on removing all the robots and planning on giving Americans spoons to rebuild the manufacturing base from the ground up.

The other thing that Clinton and so many people miss… the biggest reason why outsourcing has exploded over the decades is actually devaluation of currencies in the host nations.

 Shh, don’t tell the politicians. You’ll just confuse them with facts.


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